T106 Information return of non-arm's length transactions with non-residents

Introduction

The following tables represent a modification of a collection of datasets provided by the Canada Revenue Agency in response to a request from the Parliamentary Budget Officer in April 2019. The statistics contain information on non-arm’s length transactions between persons resident in Canada and non-resident persons as reported on form T106 for the 2014 to 2018 taxation years, and objections data covering the period of April 1, 2014 through to March 1, 2019.

Explanatory notes

Coverage

The statistics included in the tables related to the T106 slip cover returns for tax years 2014 to 2018, while the objections data covers the period from April 1, 2014 to March 1, 2019.

Confidentiality

To ensure the protection of taxpayer information, data have been suppressed where warranted. As well, counts are rounded to the nearest multiple of 10. For example, 104 would be rounded to 100 and 105 would be rounded to 110. Dollar amounts are rounded and in thousands in all tables. Totals may not add up due to rounding or suppression.

Data sources

The statistical tables in this report which are related to the T106 Information Return of Non-Arm’s Length Transactions with Non-Residents reflect income tax returns filed and assessed (or reassessed) for the tax years that ended in 2014 to 2018. The objections data related to transfer pricing was captured in the Case Appeals System and extracted using the Cognos tool for the period of April 1, 2014 to March 1, 2019.

Transfer pricing

If you and another entity within your multinational group agree to buy or sell goods or services with each other, these transactions must be priced properly to ensure the appropriate amount of profit is reported in Canada. Transfer pricing legislation requires that these transactions occur under arm’s length terms and conditions.

For more information on transfer pricing, see What is transfer pricing?

Description of items/variables

Tax year

A tax year includes all returns with a tax year-end in the calendar year. For example, all amounts relating to a return covering the period between September 1, 2011, and August 30, 2012, will be included in these tables in the 2012 tax year.

Total amounts

Amounts included in these tables are those reported in boxes 5, F and I of the T106 - Information Return of Non-Arm's Length Transactions with Non-Residents slip and summary form.

Amounts reported in Box 5 represent the gross revenue of the reporting person/partnership (in Canadian dollars). When reporting non-arm's length transactions between a related party and a branch, it is the gross income attributable to the branch.

Amounts reported in Box F represent the total notional amounts reported in Part V of the T106 slip. These amounts apply to swap transactions only.

They include:

• 101 Interest rate contracts, including forward rate arrangements, swaps, options purchased and options written
• 102 Foreign exchange contracts, including forward contacts, cross currency swaps, cross currency interest rate swaps, options purchased and options written
• 103 Credit contracts, such as risk transfer arrangements
• 104 Equity contracts, including contracts used to transfer the economic benefits of securities and debt instruments
• 105 Commodity contracts, including swaps, forward contracts and options
• 106 Index contracts, including all contracts that derive their value from publicly traded indices
• 107 Fees, such as any fee or commission charged on derivative transactions
• 108 Other payments / receipts, such as other payments and receipts not identified above

Amounts reported in Box I represent the combination of the totals from boxes A, B, C, D, G and H of the T106 slip.

Total contracts

Counts included in this table are those reported in box E from Part V of the T106 slip.

Transfer pricing subject

The data provides information on objections that have been resolved and categorized as follows:

• Reversed in full: Assessments which were reversed in full after review of objections.
• Reversed in part: Assessments which were partially reversed after review of objections.
• Confirmed audit assessments: Assessments which were confirmed after review of objections.

Tables in PDF format

Please see the explanatory notes for these tables.

• Table 1 - Box E: Total number of contracts from part V of the T106 slip (tax years 2014 to 2018)
• Table 2 - Box F: Amount totals ($) from part V of the T106 slip (tax years 2014 to 2018)
• Table 3 - Box I: Amount totals ($) from part V of the T106 slip (tax years 2014 to 2018)
• Table 4 - Box 5: Total gross revenue ($) of the reporting person / partnership from section II of the T106 summary form (tax years 2014 to 2018)
• Table 5 - Transfer pricing audits (April 1, 2014 through March 1, 2019)

Tables in CSV format

Please see the explanatory notes for these tables.

Table 1 - Box E: Total number of contracts from part V of the T106 slip (tax years 2014 to 2018)

Notes:

1. Data are as of October 3, 2018.
2. Data are presented on a tax year basis and are subject to change as more T106 information returns are received and further analysis is performed.
3. Counts are determined using Box E in Part V of the T106 slip.
4. Counts are rounded to the nearest ten.
5. 2018 tax year is considered incomplete.

Table 2 - Box F: Amount totals ($) from part V of the T106 slip (tax years 2014 to 2018)

Notes:

1. Data are as of October 3, 2018.
2. Data are presented on a tax year basis and are subject to change as more T106 information returns are received and further analysis is performed.
3. Amounts are calculated using Box F in part V of the T106 slip.
4. All amounts ($) reported in Canadian dollars (CAD).
5. Amounts are rounded to the nearest thousand.
6. 2018 tax year is considered incomplete.
7. A hyphen [-] indicates that the information has been suppressed for confidentiality purposes.

Table 3 - Box I: Amount totals ($) from part V of the T106 slip (tax years 2014 to 2018)

Notes:

1. Data are as of October 3, 2018.
2. Data are presented on a tax year basis and are subject to change as more T106 information returns are received and further analysis is performed.
3. Amounts are calculated using Box I in in part V of the T106 slip.
4. All amounts ($) reported in Canadian dollars (CAD).
5. Amounts are rounded to the nearest thousand.
6. 2018 tax year is considered incomplete.

Table 4 - Box 5: Total gross revenue ($) of the reporting person / partnership from section II of the T106 summary form (tax years 2014 to 2018)

Notes:

1. Data are as of October 3, 2018.
2. Data are presented on a tax year basis and are subject to change as more T106 information returns are received and further analysis is performed.
3. Amounts are calculated using Box 5 in section 2 of the T106 slip.
4. All amounts ($) reported in Canadian dollars (CAD).
5. Amounts are rounded to the nearest thousand.
6. 2018 tax year is considered incomplete.

Table 5 - Transfer pricing audits (April 1, 2014 through March 1, 2019)

Notes:

1. The data contains Mutual Agreement Procedure cases and reversals through the regular objections process.  In the former case, there is no implication that Appeals actually disagrees with Audit – they are simply processing the result of a double tax elimination negotiation on behalf of Competent Authority Services Division.
2. The data provided only represents information related to the transfer pricing component and associated income under dispute.